Once customers find you, it’s your job to get them to stay. Loyal customers don’t just spend more; they help to grow your brand as ambassadors.
In this blog, we’ll discuss eight ways to boost customer loyalty so that your customers come back again and again.
What is Customer Retention?
Customer retention measures how well your business can maintain a relationship with your customer base and keep them satisfied with your products or services.
Customer retention strategies aim to increase customer loyalty, boost satisfaction, and encourage repeat purchases.
These strategies include:
- Providing excellent customer service
- Offering loyalty programs
- Personalizing communication
- Consistently delivering high-quality products or services use
Why Customer Retention Matters
91% of customers who had a bad experience with a company will never do business with that company again.
Plus, acquiring new customers can cost up to five times more than retaining existing ones.
So, it only makes sense to invest in customers who have already invested in you. When attracting new customers, you use a lot of resources to win them over. But by focusing on retention, you can optimize your marketing budget.
And you’ll reap the benefits because loyal customers tend to spend more over time. In fact, they spend 67% more on products and services than new customers.
So, even though you may have more new customers than existing ones, your loyal ones make up most of your revenue. This increases overall customer lifetime value.
The more often a customer buys from you, the more likely they will do business with you again. For example, after making their second purchase from your brand, there’s almost a 50% chance the customer will buy again, and the number increases from there.
How to Calculate Your Customer Retention Rate
One key metric to follow is your customer retention rate (CRR). It measures the number of customers your company retains over time.
For example, if you gain 10 new customers within a month and lose 5, your retention rate is 50%.
To measure customer retention with CRR, start by determining the specific time frame you want to measure. It could be on an annual, quarterly, monthly, weekly, or even daily basis.
Then, you’ll need to determine these values:
- E: The number of customers at the end of a specific period;
- N: The number of customers acquired within the specific period;
- S: The number of customers at the start of the period.
After gathering this information, plug those numbers into the customer retention formula:
[(E-N)/5] x 100 = Customer retention rate
8 Effective Customer Retention Strategies
Now that you know what customer retention is, why it’s important, and how it’s calculated, let’s examine some of the best techniques for creating lasting customer relationships.
1. Provide Exceptional Customer Service
No customer wants to do business with a company that doesn’t help them with a question or issue they’re having.
To foster customer loyalty, it’s essential to offer exceptional service that results in positive customer experiences. That means:
- Finding solutions that actually meet customer needs;
- Providing various channels for customer support;
- Promptly dealing with customer complaints.
Chewy is well-known for its top-notch customer service. They go above and beyond to respond to customers as soon as possible (across multiple digital touchpoints).
They even send flowers and cards when furry friends pass away.
In short, great customer service interactions also involve practicing empathy and placing yourself in the customer’s shoes to understand exactly where they’re coming from and what they’re experiencing.
Taking this empathetic approach will help you show them that you care and make them feel that you value them.
To offer customer service that encourages repeat buyers, invest in a great customer support team and AI customer service tools. Empower them to make decisions and take actions that prioritize higher customer satisfaction.
2. Perfect the Onboarding Process
The goal of customer onboarding is to familiarize new customers with the value of your product or service.
A seamless, frictionless onboarding experience bridges the gap between the initial purchase or sign-up and the successful use of your product.
To perfect the onboarding process, follow these tips:
- Guide users through their first interactions with your product;
- Maintain ongoing communication through follow-up emails;
- Facilitate integrations with other tools and platforms;
- Offer complete walkthroughs and tutorials;
- Send personalized welcome emails;
- Simplify the sign-up process.
Here’s a great onboarding email example from Sender that addresses the recipient by their name and offers a simple step-by-step guide on how to start using the platform to achieve great results.
To measure the success of your customer onboarding efforts, use key customer retention metrics, including:
- Time to first value: The time it takes a customer to experience the benefits of your products after onboarding;
- Rate of upgrades or conversions: How often customers upgrade or convert from trials;
- Customer engagement: How well customers interact and engage with your product.
Create professional welcome emails in minutes, or even better — automate them, sit back, and watch the results flow.
3. Create a Customer Feedback Loop
To create a feedback loop, collect customer feedback and act on it to solve their pain points and add value to your products.
This is how it works:
- Collect feedback from customers.
- Analyze that feedback.
- Acknowledge the feedback.
- Act on the findings.
- Bring customers up-to-date with changes.
Let’s look at Starbucks as an example. In 2016, the global coffeehouse chain was receiving complaints from its customers about its lack of non-dairy creamer options. Customers wanted Starbucks to add almond milk to its list of non-dairy coffee creamers.
In response to this feedback, Starbucks started conducting surveys. After recognizing demand through these customer insights, the company began testing almond milk in select stores.
Starbucks received a positive response from customers. Now, almond milk is a permanent menu option nationwide.
4. Keep Your Products and Services Top of Mind
Keeping products and services at the forefront of customers’ minds is one of the most effective customer retention strategies in today’s dynamic market landscape.
After all, just because you’ve acquired new customers doesn’t mean they’re going to automatically keep purchasing from your brand.
As a company looking to retain customers, you have to put in the work to build a loyal customer base.
Here are some ways to engage customers and keep your company fresh in their minds:
- Get active in the community by sponsoring local sports teams, organizing food drives, or getting involved with local charities;
- Create an email newsletter using marketing automation software to welcome and re-engage customers;
- Hold regular contests offering your products as prizes;
- Encourage feedback by conducting surveys;
- Offer personal customer experiences;
- Offer discounts and coupons;
- Provide educational content.
StudioSuits, a leading men’s fashion brand, does a great job of staying top of mind with its customers.
Chipotle is one of the best examples of customer retention. The brand consistently updates customers with the latest trends and offerings, exclusive deals only for loyalty club members, and personalized interactive newsletters, like this one:
Through regular updates on new product releases, special holiday offers, and freebies for loyalty points, Chipotle gets customers excited about its offerings by building anticipation.
This proactive approach keeps customers engaged and positions Chipotle as a customer-oriented fast food brand. By reinforcing its presence in customers’ minds, Chipotle creates brand ambassadors, ultimately leading to higher customer retention rates and sustained loyalty.
5. Reward Promoters and Loyal Customers
Providing rewards is a great way to make customers feel like you appreciate and value their business.
For example, you can create a referral program to not only attract potential customers and encourage word of mouth but also boost satisfaction with current customers.
Kiehl’s encourages current users to refer friends to receive 25 points in which can be later used for in-shop purchases.
The email is super easy to read, thanks to its clean design and clear copy. They lay out the referral conditions in a simple, step-by-step format that makes it a breeze to follow.
No wonder it’s so effective—it’s all about making things easy and straightforward for their customers. If you’re looking for inspiration, Kiehl’s nailed it with this one!
6. Extend Support Beyond Purchase
You can get loyal customers without losing first-time customers.
How? The key to increasing customer retention rates is creating a positive customer experience throughout the entire customer journey with your products or services.
This involves being there from the initial purchase decision to post-purchase usage and beyond.
Be sure to provide:
- Regular communication by staying in touch with customers through regular communication, newsletters, and updates;
- Proactive customer service that anticipates and addresses customer needs and concerns before they arise;
- Continuous education through ongoing training and communication;
- Ongoing assistance through tutorials and resources.
Take a telehealth company Hims&Hers as the perfect example. This brand encourages first-time purchasers to download the app for treatment reminders.
But they don’t stop there. Each email series offers simple healthcare tips to keep communication going by providing helpful educational content.
7. Exceed Customer Expectations
To stand out from competitors and reduce customer churn rate, blow them away with memorable customer experiences.
To do this, go above and beyond. This might mean offering unexpected perks, additional services, or special discounts to show customers you appreciate their loyalty.
Look to build emotional connections with your customers by showing empathy and expressing your gratitude for their loyalty to your brand.
Zappos, an online shoe and clothing retailer, exceeded customer expectations when one of its customer service reps talked to a customer for over 10 hours. At first, the call wasn’t even about a Zappo product. The rep was informing the customer about life in Las Vegas. Eventually, the call led to the sale of a pair of Ugg boots.
This commitment to putting customers first and prioritizing their needs above all else is the very thing that creates satisfied customers and drives a higher repeat-customer rate.
8. Engage Existing Customers Through Customer Loyalty Programs
Implementing a customer retention program, also known as a customer loyalty program, can encourage customers to keep doing business with your brand. They involve offering rewards to repeat customers.
Customer retention programs often offer rewards like:
- Early and exclusive access to new products
- Exclusive merch
- Free products
- Awards
- Points
Here’s a great example from Dr. Squatch. The more a customer spends on their organic soap products, the more points they earn. When customers build a nice bundle of points, they can use them to score discounts on future purchases.
If the customer doesn’t sign up for the rewards program, they’ll miss out on these savings opportunities.
Key Takeaways
By following these customer retention techniques, you can show new and existing customers that you’re committed to keeping them happy and satisfied.
- Customer retention encourages customers to repeatedly buy from your brand because they know they’re always going to get a positive experience no matter what;
- Whether it’s an existing customer or a brand new one, a good customer retention strategy can help keep your company top of mind throughout the customer journey;
- Use a marketing automation tool to streamline communication with your audience and build relationships for a high customer retention rate.
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Author’s bio
Born and raised in Atlanta, Britney Steele is a freelance writer with 5+ years of experience. She has written for a variety of industries, including marketing, technology, business, finance, healthcare, wellness, and fitness.
